[JonathanBeuys]

This confuses me about discussions like these on HN:

On the one hand, there are so many stories on HN complaining about incompetent and dystopian security practices in the financial industry.

And many tips on how to cope with it. Like not giving PayPal your bank account, rather pay 3% to put a credit card between PayPal and your bank account. And to keep your phone number secret to avoid sim swapping and PayPal exposing it.

It seems to be a fight between customers who are supposed to try and hide as much data as possible from the companies. Because that data causes a threat to you. And the companies that try to get as much data as possible.

On the other hand, cryptographic solutions which put the user in control and do not expose any data to the outside world are frowned upon. To me, it seems the logical solution. I want a private key, that only I know. And to be able to sign transactions with it without exposing any data.

If such a solution based on cryptography would be widely used, I would hold a smallish amount of buying power on my "crypto wallet" and use that for day to day transactions. And regularly refill it directly from my bank account.

The best of both worlds: For my smallish day-to-day transactions, I am in full control of the security and privacy. And my savings stay on my bank, completely shielded from my day-to-day transactions.

Why does everyone on HN hate this approach?

[thematrixturtle]

I can't claim to speak for "everyone", but I was a crypto fanboy in the early days, when it seemed destined to be an actual currency, which would be great for all the reasons you mention.

But at some point it all went off the rails: crypto became a deeply rigged casino targeting the most vulnerable people they could find, fueled by insane amounts of energy consumption and money laundering.

[JonathanBeuys]

The same happened during the early days of the internet. Insane amounts of companies were founded, hyped and IPOed. Many many naive people turned into investors, losing trillions of Dollars.

Should we have discarded the whole internet idea because of that?

[nicbou]

It's hardly comparable.

Scams happened over the internet, but didn't exploit critical problems with the technology itself.

Crypto scams exploit problems with crypto itself. Where else can a tiny mistake allow people to irreversibly drain your account in an instant and vanish?

[thematrixturtle]

This comparison was also made a lot in the early days of crypto, but at this point we're 15 years into crypto and real-life use cases remain awfully thin on the ground.

[JonathanBeuys]

15 years because the Bitcoin whitepaper was written in 2008?

The Internet Protocol whitepaper was written in 1974.

15 years later, in 1989, real-life use cases of the internet were at least as thin on the ground as crypto use cases today.

[ulrikrasmussen]

I am so tired of the comparison with the internet because it tries to conclude that crypto will be successful despite the scepticism because people were also sceptic of the internet. You could compare any new thing with the internet and come up with a similar prophecy, but it just isn't given that the success is ever going to come.

[tialaramex]

By 1989 the Internet's primary applications are email, Usenet news, and the file transfer protocol. Those may not seem like much today, but they're a big deal in 1989.

[JonathanBeuys]

In crypto, there are payments, store of value, decentralized exchanges, smart contracts, NFTs, DAOs...

I tend to think crypto is used more already than the internet was in 1989?

[LilBytes]

I'm not sure crypto and the internet are even remotely in the same ballpark for capability or potential.

[LeetHacks]

Because at the end of the day PayPal is better for the average consumer than a solution where somebody needs to handle a private key.

A lot of tech savvy people lost money due to losing their keys. Now imagine the disaster if your mother needs to handle them.

Payment solutions are also heavily regulated, often also in favour of the consumer. If my bank goes bankrupt or gets hacked I have much better garuantees of getting my money back compared to when I lose my private key.

The final reason (in my opinion) that "private key solutions" are not adding much is that to legally use it you need to comply with the regulations for traditional finance. Hosting an exchange without KYC can be considered illigal in many western countries.

Want to advocate for less regulations in finance? Sure, that's a valid political opinion. But you need to go into political solutions for that, not technological ones.

[JonathanBeuys]

For the average use "handle a private key" just means installing an app. If crypto currencies were popular enough, it would already come with a phone, just like a browser.

People already keep super important stuff on their phones. Their email accounts, their lifetimes photos, their contacts, their notes... Losing those seems to be more dangerous than losing your digital wallet. An event that would be similar to losing your physical wallet.

[hnaccount_rng]

Loosing my physical wallet will cost me: About a hundred euros (cash), the annoyance of having to get a replacement for the cards: - ID (probably 4 weeks or so and a visit to my Bürgeramt) - Medical Insurance (probably a week and a phone call) - 2 credit cards and a bank card (one, maybe two phone calls and a couple of euros) - a handful of membership cards, non of which are card only and only there for backup to the corresponding app I would say the total loss of this rounds to 100 euros and a couple of phone calls.

Your equivalent is not "loosing your wallet, it's loosing access to your bank account (which would cost at least thousands of euros). There is a difference! No, being in physical possession of my bank card doesn't give you the right to the contents of it. And there are _lots_ of redundant security layers beyond the simple card.

[zeroclip]

False equivalence. If you lose your crypto hot wallet, you might lose $100 as well. Much less of a hassle than losing your physical wallet with several important credit, debit, health, driver’s, and ID cards.

A hot wallet is meant to be used like cash in your pocket. Putting thousands or millions of dollars in your pocket would be unwise. The same logic should apply to a hot wallet.

You can store higher amount of wealth in a cold wallet, like a multi sig or smart contract wallet that has social recovery and transfer protection.

[kelnos]

> I want a private key, that only I know. And to be able to sign transactions with it without exposing any data. Why does everyone on HN hate this approach?

Because, in general, key management is hard, and your average user will likely not be able to understand such a flow, and will additionally probably lose their private key.

PayPal already has a pretty reasonable way to secure accounts: username+password+TOTP (using an app for the OTPs, not SMS). No, it's not perfect, and can be phished, but for most people it will be good enough. People who care about the phishing risk can use a FIDO2 hardware token instead of TOTP. All of this is common and widely-implemented enough that it's feasible to require that users do this.

But instead, probably in the name of reducing payment friction, they have decided on this horribly insecure method as described by OP. Ugh.

[TheDong]

Cryptocurrencies are what you obviously mean by your "a solution based on cryptography" phrase.

As they exist now, they are even more difficult to use safely and securely. For every one person who gets hacked via paypal's SMS crap and a simswap, there would be 50 people who would lose their crypto wallet to dropping their phone in the river and forgetting the passphrase.

It's perfectly consistent to have issues with cryptocurrency and with other centralized financial institutions since they both have awful security models for the average person. Financial institutes are too insecure, and crypto is too unusable.

I, personally, would like the government to provide a universal authorization server ("log in with GovID" or whatever), and require all banks in the country to support that auth mechanism, and then ensure that mechanism is both incredibly secure, but also has suitable fallbacks to recover access.

The government is uniquely positioned to be able to do that in theory, if only the government weren't wildly allergic to doing _anything_.

I'll settle for a bank that does not ever fall back to SMS and supports webauthn so I can use my yubikey, and fortunately such banks do exist, so things aren't actually so bad. As long as I don't use paypal or various other less competent software.

[tomschwiha]

Which government? US? German? UK? Australian? ..

[quickthrower2]

Cryptographic key management is a hard thing for the masses.

Biggest problem is losing the key. Also how to sync the key between devices. Not get tricked into giving it away.

Best case might be a authenticator type of app piggy backing on your phones physical and electronic security.

Most people look after their phones. Then maybe they back up somewhere else.